Podcast advertising: A booming ad marketplace

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  Quantumrun Foresight
• December 2, 2022

Insight summary

Podcast popularity is reshaping advertising, with brands leveraging this medium to connect with listeners in unique ways, driving both sales and brand discovery. This shift is influencing content creators and celebrities to start podcasts, expanding the industry's diversity but risking content authenticity due to commercial pressures. The implications are widespread, affecting career sustainability, business strategies, and could even prompt government and educational adaptations to this evolving landscape.

Podcast advertising context

Podcasting has enjoyed a surge in popularity in recent years. By the end of 2021, brands were dedicating more resources to advertising on the medium, which reaches consumers in ways that few other mediums can. According to a survey by Edison Research in January 2021, over 155 million Americans have listened to a podcast, with 104 million tuning in monthly. 

While advertising fatigue is becoming a growing challenge for marketers that purchase time and space on music, television, and video platforms, podcast listeners were the least likely to skip commercials across 10 tested advertising channels. In addition, research conducted by GWI showed that 41 percent of podcast listeners frequently discovered relevant companies and products through podcasts, making it a highly popular platform for brand discovery. In contrast, 40 percent of television viewers frequently discovered products and services through consuming the medium, compared to 29 percent of social media users. Podcasts also allow brands to access defined customer segments more easily, particularly shows that focus on specific topics such as military history, cooking, or sports, as an example. 

Spotify, a leading music streaming service, entered the podcast market in 2018 through a series of acquisitions. By October 2021, Spotify hosted 3.2 million podcasts on its platform and had added around 300 million shows between July and September 2021. Furthermore, it has created a premium membership platform for United States-based podcasters and allowed brands to purchase airtime before, during, and at the show's end. In the third quarter of 2021, Spotify's podcast advertising revenue rose to USD $376 million.

Disruptive Impact

As brands increasingly turn to podcasts for advertising, podcasters are likely to explore innovative methods to boost their advertising income. One such method involves the use of special promotional codes provided by marketers. Podcasters share these codes with their listeners, who in turn receive discounts on products or services. This not only drives sales for advertisers but also enables them to track the impact of their campaigns by comparing purchases made with and without the promo codes.

This trend of growing advertising investment in the podcast sector is attracting a diverse range of content creators and celebrities. Eager to capitalize on this revenue stream, many are launching their own podcasts, thus broadening the scope and variety of content available. This influx of new voices could significantly expand the industry's reach and influence. However, there's a delicate balance to be maintained. Excessive commercialization could potentially dilute the unique appeal of podcasts, as content might increasingly be tailored to suit advertiser preferences rather than audience interests.

A potential long-term impact of this trend is a shift in the podcasting landscape, where listener preferences and tolerance for advertising play crucial roles. While increased commercialization offers financial benefits, it also risks alienating dedicated listeners if not managed carefully. Podcasters may find themselves at a crossroads, needing to balance the allure of advertising revenue with the need to maintain authenticity and listener engagement. 

Implications of podcast advertising's growing influence 

Wider implications of podcast advertising becoming increasingly common in the podcast industry may include:

• Podcasting becoming a sustainable career, and not just for the industry's leading creators.
• More people creating their own podcasts to capitalize on the industry's increased growth (and boosting recording equipment and software sales as a result).
• Podcast platforms forming data-sharing agreements with advertisers.
• Increased market and venture investment into podcast format and platform innovation long term.
• Smaller businesses adopting podcast advertising as a cost-effective marketing strategy, leading to increased brand visibility and consumer engagement.
• Governments considering regulatory frameworks for podcast advertising to ensure consumer protection and fair advertising practices.
• Educational institutions integrating podcast production and marketing into curricula, reflecting the industry's growing relevance and providing students with practical skills.

Questions to consider

• Do you think the podcasting industry will, in time, become a victim of advertising fatigue like other platforms?
• Do you listen to podcasts? Would you be more included in making a purchase based on listening to an advertisement on a podcast?